Figure 15-2
The figure below illustrates the cost and revenue structure for a monopoly firm.

-Refer to Figure 15-2.Profit can always be increased by increasing the level of output by one unit if the monopolist is currently operating at (i) Q₀.
(ii) Q₁.
(iii) Q₂.
(iv) Q₃.

Question

Figure 15-2
The figure below illustrates the cost and revenue structure for a monopoly firm.
 
-Refer to Figure 15-2.Profit can always be increased by increasing the level of output by one unit if the monopolist is currently operating at (i)	Q₀.
(ii)	Q₁.
(iii)	Q₂.
(iv)	Q₃.

Quizplus · Accepted Answer

This is because at Q₀ and Q₁, the marginal revenue is greater than the marginal cost. As a result, the monopolist can increase the level of output and continue to earn positive profits. At Q₂ and Q₃, the marginal cost is greater than the marginal revenue, so increasing the level of output would lead to lower profits. Therefore, (iii) and (iv) are not the best choices.

Figure 15-2 the Figure Below Illustrates the Cost and Revenue Structure for Structure